Love is in the Air: The Ultimate Financial Checklist for Newlyweds
Reading time: 6 Minutes
February 13th, 2021
About to get married? Congratulations! Before the two of you head into nuptial bliss, it's important to have a conversation about your finances together. Honest discussions now can ensure you start your marriage on the right foot and avoid any financial surprises down the road.
Here's a handy checklist of what you should talk about and what planning steps you should make before—and after—you tie the knot.
1. Style Check
A good starting place for financial planning is to talk spending styles. How do each of you approach budgeting, spending, borrowing and the rest of it? Are both of you natural savers, or does one partner like to live more in the moment? It's not necessary to be 100 percent on the same page, here, but starting to set expectations is a great first step.
It's OK to get into the nitty gritty stuff, too. For example, should you discuss large purchases with your spouse ahead of time, and, if so, what constitutes a big purchase—$100? $500? Having these discussions now can help smooth out potential bumps later.
2. Bank Accounts—Shared or Separate?
Every couple handles money differently but, as you join your lives together, you'll need to discuss how finances will be managed. Some couples may decide to start fresh with a “what's yours is mine" perspective by closing out any individual checking accounts and creating a new joint checking account. Others may prefer to keep their separate bank accounts and continue managing expenses separately.
You could even go with a hybrid approach, with separate accounts and a joint account for shared household expenses or savings. Remember, there's no right or wrong choice, as long as a conversation takes place, and you're both comfortable.
3. What's Mine is Yours (or Not)
If one spouse is carrying a considerable amount of debt as you head down the aisle, talk about how you'll handle it. Will you take on the debt as a couple or keep it separate? If one person makes more money and pays off the debt for the other, will it create resentment (on either side!) or could it strengthen the relationship? Debt can be a stressful and emotional topic, so remember to handle the conversation with grace, honesty and acceptance.
On the opposite side of the scale, it's just as important to talk about your expectations for any existing substantial assets, including property or nest eggs. Hawaii is not a community property state, which means in the event of a divorce, your assets won't automatically be divided 50/50 between the two of you. A judge may potentially decide how to split the property, or allow you to come up with a plan that's agreeable to both of you. A straightforward conversation now could help make things easier in the future.
You probably already have long- and short-term goals for things you'd like to achieve personally. Now that you're getting married, it's a good idea to bring these to the table and compare them with the goals of your spouse-to-be. It can be exciting to have someone to help get you to the next stage—you just have to make sure you're both heading in the right direction.
How do you both align on short-term goals like saving up for a vacation, or buying another car? What about longer term achievements such as paying off student loan debt, preparing for a family or buying a home? Knowing how the two of you plan to prioritize and pursue these goals is, as they say, half the battle.
5. The Road to Retirement
Of course, one goal that every married couple will have is to share their golden years together. What's your plan to actually get there? This discussion will vary widely depending on your financial situation.
If you both make approximately the same amount of income, you could consider splitting living expenses evenly and continue contributing equally to separate retirement accounts. If there is a significant income disparity, the spouse earning more could pay for living expenses so that both spouses can continue contributing to retirement accounts. Or maybe one spouse stays at home to raise children, and doesn't contribute to a retirement account during that time. The important thing is to make sure both spouses feel your path to retirement is fair and equitable, and that you're saving enough to ensure a comfortable nest egg by the time you're both ready to retire.
6. It's Budget Time
Now that you've had a few discussions and mapped out your respective views on spending styles, goals, debts and assets, it's time to create a budget. This will be the fundamental, living document that helps you track your finances together. Take an inventory of all your income sources and normal expenses, and start plotting them out, remembering to factor in both long- and short-term goals. If you're still perfecting your financial planning skills, we've got a few tips for how to create a budget.
Keep in mind that a budget isn't a one-and-done kind of thing. Plan to regularly revisit your budget to assess where you're on track, and where you both might have to adjust. A budget that doesn't reflect the reality of your marriage won't do either of you much good.
7. Preparing for the What-Ifs
It is hard to imagine losing a spouse, which is why many newly married couples avoid hard conversations about what happens financially if the unexpected does happen. However, it's important to be prepared.
Talk with an estate planning attorney about setting up a will once you're married, outlining exactly who will manage your shared estate if someone passes.
Look into term-life insurance policies that can ensure that, if a working spouse passes, your family would still be able to support itself.
Also, in case you haven't already, add your spouse's name as a beneficiary to any separate bank accounts and retirement funds. It's an easy step to take and will go a long way in the unfortunate case of an early passing.
8. Keep Communicating!
Remember, like marriage, you won't be able to sort out your financial planning details with just one sit-down. Talking about money is an ongoing process. Once you get married, you'll continue to discover things about each other and yourself along the journey. Spending habits change. As life happens and priorities shift, you may want to create new shared financial goals. Always keep an open line of communication in marriage about finances, along with everything else.
As long as these discussions take place, you'll be able to achieve long-term financial success as a couple. And, if you're interested in opening a joint checking account, explore your options with Bank of Hawaii today.
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